9th March 2018
Data source: S&P Global Market Intelligence
Victoria Gold Corp. secured a financing package totaling approximately C$505 million to fund the development of the Eagle gold deposit, part of its Dublin Gulch property in Canada’s Yukon Territory, through to commercial production.
The company said March 8 that closing is anticipated by the end of the month, subject to final approval from the TSX Venture Exchange, and the first gold pour at Eagle is targeted in the second half.
The package comprises two credit facilities totaling US$175 million from Orion Mine Finance, an equipment financing facility of up to US$50 million from Caterpillar Financial Services Ltd., a C$98 million royalty financing with Osisko Gold Royalties Ltd., and a C$125 million share placement with Orion and Osisko.
Orion is providing Victoria Gold with a US$100 million secured subordinated loan facility, available for two years from closing, with an interest rate of the three-month London Interbank Offered Rate plus 6.70% and a two-year interest holiday. Principal repayment is due March 31, 2024.
Subsequently, the company will have access to a US$75 million senior secured debt facility from the date the US$100 million facility is fully drawn until two years after closing. This facility’s interest rate is set at the three-month LIBOR plus 5%, with the same interest holiday as the subordinated loan. Principal and accrued interest will be repayable in 15 quarterly installments starting two years after closing.
The six-year, amortizing US$50 million equipment finance facility from Caterpillar Financial will support the acquisition of primarily new Caterpillar equipment.
Apart from the facilities, Orion agreed to subscribe for 150 million common Victoria Gold shares at 50 Canadian cents apiece for a total of C$75 million. Victoria Gold will issue Orion 25 million warrants and gold call options for 20,000 ounces, both with five-year terms.
The warrants are exercisable at 62.5 cents per share, while the strike price of the gold call options is subject to the gold price at the time of closing plus a premium of US$150/oz. In addition, the company granted Orion off-take rights for up to 25% of Eagle’s annual gold production at prevailing market prices.
In addition, Victoria Gold signed a term sheet for the sale of a 5% net smelter royalty on future production from Eagle to Osisko for C$98 million, with the royalty to decrease to 3% after Osisko receives 97,500 ounces of refined gold. Osisko will also subscribe for 100 million common Victoria Gold shares at 50 cents apiece for C$50 million.
Upon completion of the private placements, Orion will own approximately 19% of Victoria Gold and Osisko will have a 16% shareholding, with each able to nominate one director to the company’s board.
Victoria Gold noted that as a result of the new funding package, its US$220 million project finance facility with BNP Paribas is no longer in effect.
